1% Vs 99% Battle Comes To GE Detroit Shareholder Meeting Tomorrow

I’m in Michigan to cover the GE shareholder meeting tomorrow. I grew up in Michigan and have to say that Mitt Romney was exactly right that the trees here really are the right size. The look of the houses, the layout of the roads, the birds, everything feels right. Of course, my wife grew up in England, and she says that the trees in England are the right size. (She also says the beer there is better — and she’s right.)

I grew up in Michigan. My family was in Michigan because my grandfather worked in what is now called “Carriage Town” in Flint in the days of Dort and Durant and Nash and the rest of the early auto company industrialists. (No he didn’t get stock.) He fought in the first world war, and considered himself an American. Later he was an executive at different companies, living outside of Detroit. In WWII he and a number of other auto company executives went to work in Washington for $1 a year, because they felt it was their patriotic duty. Later, when Eisenhower was President he went to work in the government, and considered it public service.

My grandfather was a proud Republican, and even spoke at Rotary Club events. He worked under and was a friend of Mitt’s dad George, another auto executive. I found a speech online where he said he felt that big corporations should be taxed more to incentivize formation and competition of smaller, innovative companies and said they they create more jobs. I know he agreed that we need a high top tax rate (it was over 90% when he was in the Eisenhower administration), that the revenue should be used to invest in infrastructure because it is the soil in which businesses grow and prosper. He believed in his country and in the importance of making things in America.

Later on the auto companies went in a different direction. Bob Lutz, former vice-Chair of GM is a “car guy” and a conservative. In his recent book Car Guys vs. Bean Counters: The Battle for the Soul of American Business Lutz wrote about how the MBA and finance types took over management from the “gar guys” and didn’t care about design, product quality, customer satisfaction — only about money, and really only short-term money even if it meant sacrificing the company in the long term.

The “bean counters” took over more than just the car companies, they took over company after company, industry after industry. And they sacrificed more than just their companies to short-term profits. When they closed factories, as documented in Michael Moore’s Roger & Me, the community of Flint, Michigan was devastated when GM closed car factories there. This was back 1989 and presaged the tsunami that was coming. As I wrote about in 2010, the movement of more and more manufacturing out of the country wiped out the midwest and other regions, and the resulting loss of jobs and wages combined with the huge trade deficit helped lead to the financial crisis and current “jobless recovery.”

On My Way To Detroit

I stayed in Flint last night and am writing this from a coffee ship in downtown Pontiac on the way to Detroit. I mentioned “carriage town” in Flint – the little area which incubated much of our automotive industry and with it the Midwest’s manufacturing prosperity. Today the area is neglected. The original buildings at least have historical markers, but the area is relatively deserted, several houses in the area are boarded up, with vacant lots where the city has cleared derelicts. The roads are not in good shape, there are many empty storefronts, roadside businesses, offices and manufacturing facilities. The city has lost and is losing population, and has been taken over by Michigan’s anti-democracy “emergency manager” law. (“If you people won’t sell off your assets to private interests, cut public employee pay and pensions, cut back on the things democracy does for citizens, etc., and other “reforms” that enrich the 1%, then we’ll just take over and make it happen and you don’t get a say.)

Downtown Pontiac is one more of so many examples of the devastation of our country’s communities by the short-term-profit, long-term-collapse mentality of America’s ruling elites. We drove by closed factories, boarded-up stores and houses, and sit in a little coffee shop – one of the few remaining businesses in the “downtown.”

GE Shareholder Meeting Tomorrow — 1% vs 99%

The 1% vs 99% clash comes to Detroit tomorrow. The GE shareholder meeting takes place in that city tomorrow, and while it is going on inside, outside people will be making their voices heard with nonviolent protests. GE brings to light the the battle between short-term-gain-for-a-few vs long-term health of the communities and economy of the rest of us.

GE has made billions in profits, but paid zero federal income taxes from 2008 to 2010. Over the last ten years, GE’s effective tax rate has been 2.3%. In 2010 alone, the top five GE executives received $75.9 million. Just five people. Over the last three years, GE’s executives collected $234 million.

Since 2008, GE has spent more on DC lobbyists than it paid in taxes. GE spent $84.35 million on lobbyists from 2008-2010.

The cause of our terrible economic inequality is clear: the 1% have too much power, and use that power to enrich themselves at the expense of the rest of us — the 99%. Since 2008, at least thirty big American corporations reported big profits and paid their CEOs excessively while laying off workers and spending more on Washington lobbyists than they paid in taxes. In fact, 100 of the Fortune 500’s most profitable companies received average tax refunds of 2%.

Dave Johnson

Dave Johnson (Redwood City, CA) is a Fellow at Campaign for America's Future, writing about American manufacturing, trade and economic/industrial policy. He is also a Senior Fellow with Renew California.
Dave has more than 20 years of technology industry experience including positions as CEO and VP of marketing. His earlier career included technical positions, including video game design at Atari and Imagic. And he was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.

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